Greencoat UK Wind Regulatory News (UKW)

Greencoat UK Wind PLC (UKW)

23 February 2015

UKW - Final results announcement

Annual report for the year ended 31 December 2014

Greencoat UK Wind PLC is the leading renewable infrastructure fund, solely and fully invested in operating UK wind farms. The Company's aim is to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cash flow and the prudent use of portfolio leverage.

Highlights

· The Group's investments generated 564.6GWh of electricity, in line with expectations.

· Net cash generation after fees, costs and expenses (Group and wind farm SPVs) was £32.4 million.

· Acquisition of interests in six further wind farms using the Group's cash resources and acquisition debt facility increased the portfolio to sixteen wind farms, net generating capacity to 271.5MW and GAV to £591.2 million as at 31 December 2014.

· The Company declared total dividends of 6.16 pence per share in relation to the year and announced a target dividend of 6.26 pence per share for 2015 (increased by 1.6 per cent., in line with RPI).

· NAV growth of 2.5 pence per share (adjusting for dividends).

· Successful capital raise in October 2014 at 107.0 pence per share raising gross issue proceeds of £125 million, 25 per cent. above target.

· £105 million outstanding acquisition debt facility at 31 December 2014, equivalent to 18 per cent. of GAV.

Key Metrics

As at 31 December 2014

Market capitalisation £511.4 million

Share price 111.0 pence

Dividends paid with respect to the year £24.8 million

Dividends paid with respect to the period per share 6.16 pence

GAV £591.2 million

NAV £486.2 million

NAV per share 105.5 pence

NAV growth per share (adjusting for dividends) 2.5 pence

Total return (NAV) 8.7 per cent.

TSR 13.7 per cent.

Defining Characteristics

Greencoat UK Wind PLC was designed for investors from first principles to be simple, transparent and low risk.

· The Group is invested solely in operating UK wind farms.

· Wind is the most mature and largest scale renewable technology.

· The UK has a long established and stable regulatory regime, high wind resource and £60 billion of wind farms in operation in the short to medium term.

· The Group is wholly independent and thus avoids conflicts of interests in its investment decisions.

· The UK-based, independent Board is actively involved in key investment decisions and in monitoring the efficient operation of the assets, and works in conjunction with the most experienced investment management team in the sector.

· The Group only invests in wind farms that have an appropriate operational track record (or price adjustment mechanism as disclosed in note 14 to the financial statements).

· Low leverage (including no asset level leverage) is important to ensure a high level of cash flow stability and higher tolerance to downside sensitivities.

· The Group invests in sterling assets and thus does not incur currency risk.

 Commenting on today's results, Tim Ingram, Chairman of Greencoat UK Wind, said:

"We are pleased to report the continued good performance of our portfolio and to have delivered the attractive dividend and real NAV growth promised at IPO during 2014. 

We have increased our investment portfolio from 6 to 16 UK wind farms since listing and our net generating capacity from 126.5 to 271.5MW. It is pleasing to have now acquired new wind farms from five different sellers, a testament to the benefit of the Company's independence and to its ability to be selective in its acquisitions."

Annual report

A copy of the annual report has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM. The annual report will also shortly be available on the Company's website at www.greencoat-ukwind.com where further information on the Company can also be found.

Details of the conference call for analysts and investors:

There will be a presentation call at 9.30am today for analysts and investors. To register for the event please notify Tulchan Communications, either by email to ukwind@tulchangroup.com or by telephone on +44 (0)20 7353 4200.Presentation materials will be posted on the Company's website, www.greencoat-ukwind.com, from 9.00am.

For further information, please contact:

Greencoat UK Wind PLC 020 7832 9400

Stephen Lilley

Laurence Fumagalli

Tom Rayner

Tulchan 020 7353 4200

Stephen Malthouse

Chairman's Statement

I am pleased to present the annual report of Greencoat UK Wind PLC for the year ended 31 December 2014. The Company listed on 27 March 2013 and this is the first full year of operations1.

Performance

The portfolio performed in line with expectations producing 564.6GWh of power during the year. Net cash generated by the Group and wind farm SPVs during the year was £32.4 million, out of which £20.8 million was paid in dividends and the excess was reinvested (including debt repayment). Dividend cover was thus 1.6x.

Dividends and Returns

In line with our stated target for 2014, the Company has declared dividends totalling 6.16 pence per share for 2014. In addition, NAV per share increased from 99.9 pence (ex dividend) on 31 December 2013 to 102.4 pence (ex dividend) on 31 December 2014, an increase in NAV per share of 2.5 per cent., while RPI increased by 1.6 per cent. over the same period. The full year return to investors was thus 8.7 per cent., being dividends declared plus NAV growth per share.

We consulted with shareholders during the year on frequency of dividend payments, and as a result, following the payment of the 3.08 pence per share dividend in February 2015, it is our intention to pay dividends on a quarterly basis thereafter. A resolution is to be proposed at the forthcoming AGM seeking approval of this dividend policy.

Acquisitions and Equity Raising

During the year, the Group made six additional high quality investments, increasing our net generating capacity to 271.5MW. In June we acquired Kildrummy and Maerdy wind farms and in August we co-invested with Swiss Life and acquired Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft wind farms. The Company has now acquired assets from five different vendors, a testament to the importance of independence, in order to be selective in acquisitions and to deliver best value for investors.

In October the Company raised gross proceeds of £125 million through the issuance of 116.8 million new shares at an issue price of 107 pence per share.

The Board was delighted that the placing was significantly above target, and believes that growth of the Company benefits shareholders through increasing liquidity of its shares, increasing its competitive position and providing economies of scale.

The Board is consulted on all acquisitions from pipeline to purchase, as well as fundraisings, and takes the final decisions to ensure that they are in the best interests of shareholders.

In February 2015, nearly two years after listing, seed investor, BIS, sold its shareholding. From the outset, BIS's objective was to support the launch of the Company, thereby helping to encourage significant additional private capital into renewable energy infrastructure. BIS's support has proven to be very successful, with over £1.7 billion of private capital being raised by the Company and follow-on funds, helping to speed up the process of recycling capital into the construction of new renewable energy assets.

Leverage

The Group's policy is to have no leverage at the individual asset level and to keep overall Group level borrowings at a prudent level (the maximum is 40 per cent. of GAV) to reduce risk while ensuring that the Group is at least fully invested thus always using its capital efficiently.

As at 31 December 2014, the Group's borrowings were £105 million, equivalent to 18 per cent. of GAV. Over the medium term, we would expect leverage to be between 20 per cent. and 30 per cent. (combination of short and long term borrowing).

Board

On 31 December 2014, Kevin McCullough resigned from the Board and I would like to thank him for his contribution to the Company during his term. We are pleased to welcome Martin McAdam as a Director of the Company with effect from 1 March 2015.

This year, the July Board meeting was held at the operations base for Rhyl Flats and was followed by an informative site visit.

Outlook

Renewable generation build-out is needed not only to achieve the UK's low carbon targets but also, as importantly, to bolster security of supply. Wind remains the most mature and widely deployed renewable technology available in the UK and electricity production from wind is becoming an increasingly important part of the UK's generation mix.

We expect a significant number of further investment opportunities for the Group as utilities and developers continue to seek to recycle their capital. We are currently evaluating a number of potential opportunities for further investment, and will invest selectively, providing the terms are attractive for our shareholders.

Power prices were lower than forecast in 2014 owing to lower gas prices. The long term power price forecast is also lower but to a lesser degree. The forecast is updated each quarter and the most recent quarterly update is reflected in our reported NAV.

Given the strength and stability of our cash generation, we are targeting a dividend of 6.26 pence per share in respect of 2015 (increased in line with RPI).

Annual General Meeting

The 2015 AGM will take place on Tuesday 28 April 2015 at 2.30pm at the offices of Norton Rose Fulbright. Details of the formal business of the meeting are set out in a separate circular which is being sent to shareholders with the annual report. We look forward to meeting shareholders on that occasion.

Tim Ingram

Chairman

22 February 2015

1 The Company was formed on 4 December 2012, so comparative information in the financial statements covers the period from 4 December 2012 to 31 December 2013, but during that period the meaningful activities of the Company took place from the Company's listing on the London Stock Exchange on 27 March 2013 to 31 December 2013.

Strategic Report

Introduction

This Strategic Report has been prepared in accordance with the requirements of Section 414 of the Companies Act 2006. Its purpose is to inform shareholders and help them to assess how the Directors have performed their duty to promote the success of the Company.

Investment Objective

The Company's aim is to continue to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cash flow and the prudent use of portfolio leverage. The 2014 dividend of 6.16 pence per annum is targeted to increase in line with the RPI to 6.26 pence for 2015. The target return to investors is an IRR net of fees and expenses of 8 per cent. to 9 per cent.. Progress on the objectives is measured by reference to the Group's key metrics.

Investment Policy

The Group invests in unlevered operating UK wind farms predominantly with a capacity of over 10MW, which sell the power produced and associated green benefits to creditworthy UK offtakers under route-to-market power purchase agreements.

The Group is structured by design to be a utility friendly buyer and co-investor in utility owned wind farms since utilities are the owners of the significant majority of UK operating wind farms. The Group is wholly independent and is not tied to any particular utility or developer.

As the Group has no borrowings at the asset level, and only limited borrowing at the Group level, the annual dividend is sufficiently protected against lower power prices. At the same time, it has the ability to benefit from higher power prices as the Group is not required to be locked into long term fixed price contracts.

The Group has used acquisition debt to make further investments in the year. This has enhanced the Group's attractiveness to sellers since execution risk is greatly diminished, with the Group effectively being a cash buyer. Execution risk is also significantly lower relative to project financed acquisitions. Consequently, the Group has seen an increase in the returns it has been able to achieve from further investments. The Group will continue to use acquisition debt facilities to make further investments.

The Group will look to further refresh such debt facilities by refinancing them in the equity markets at appropriate times. While acquisition debt is drawn, the Group benefits from an increase in investor returns because borrowing costs are below the underlying return on investments.

In contrast to the PFI infrastructure sector (smaller in terms of total equity invested and occupied by larger funds), where links to developers may be beneficial in sourcing new acquisitions, independence is of key importance for the Company to continue to make acquisitions at the best possible price. The Investment Manager's relationships across the sector are also helpful.

The Group invests in both onshore and offshore wind farms with the amount invested in offshore wind farms being capped at 40 per cent. of GAV at acquisition.

The Group believes that there is a significant market in which it can continue to grow over the next few years.

Structure

The Company is a UK registered investment company with a premium listing on the London Stock Exchange. The Group includes the Company, LLP (of which the Company and the Investment Manager are the members) and Holdco, a wholly-owned subsidiary of LLP. Holdco invests in SPVs, which hold the underlying wind farm assets. The Group employs Greencoat Capital LLP as its Investment Manager.

Discount Control

The Articles of Association require there to be a continuation vote by shareholders if the share price were to trade at an average discount of 10 per cent. or more over a 12 month period. Notwithstanding this, it is the intention of the Board for the Company to buy back its own shares in the market if the share price is trading at a material discount to NAV, providing of course that it is in the interests of shareholders to do so.

Review of Business and Future Outlook

The wind farm assets have performed in line with management expectations in terms of energy production, operational expenditure and overall cash flow generation. A more detailed discussion of the individual project performance and a review of the business in the year together with future outlook are covered in the Investment Manager's Report. 

Key Performance Indicators

The Board believes that the Group's key metrics, which are typical for investment funds, together with cash generation will provide shareholders with sufficient information to assess how effectively the Group is meeting its objectives.

Ongoing Charges

The ongoing charges ratio of the Company is 1.42 per cent. for the year to 31 December 2014. This is made up as follows and has been calculated using the AIC recommended methodology.

The management fee and priority profit share paid to the Investment Manager are based on NAV. If they were stated with reference to the Adjusted Portfolio Value (in line with a number of the Company's peers) then the annual management fee and priority profit share would be 0.9 per cent., assuming 25 per cent. medium term gearing (current gearing 18 per cent.).

The Investment Manager is not paid any performance or acquisition fees.

Corporate and Social Responsibility

Environmental

The Group invests in wind farms and the environmental benefits of renewable energy are widely known. The Group's Environmental, Social and Governance policy outlines the Group's approach to responsible investing, as well as the environmental standards which it aims to meet. Responsible investing principles have been applied to each of the investments made.

Employees and Officers of the Company

The Company does not have any employees and therefore employee policies are not required. The Directors of the Company are listed in the annual report.

Social, Community and Human Rights Issues

The Company's Environmental, Social and Governance policy also outlines the Company's aims in relation to social standards, covering the requirement to continue to meet legal standards and good industry practice. The policy requires the Company to make reasonable endeavours to procure the ongoing compliance of its portfolio companies with the policy. The Investment Manager monitors compliance at the investment phase and reports on an ongoing basis to the Board.

Gender Diversity

As at the date of this report, the Board comprised three men and one woman. The Board is aware of the benefits of diversity and considers this when appointing Board Directors. The Investment Manager operates an equal opportunities policy and its partners and employees comprise fifteen men and twelve women.

Principal Risks and Uncertainties

In the normal course of business, each investee company has a rigorous risk management framework with a comprehensive risk register that is reviewed and updated regularly and approved by its board. The key risks identified by the Board to the performance of the Group are detailed below.

As it is not possible to eliminate risks completely, the purpose of the Group's risk management policies and procedures is not to eliminate risks, but to reduce them and to ensure that the Group is adequately prepared to respond to such risks and to minimise their impact should they crystallise.

The spread of assets within the portfolio both by asset type (onshore and offshore) and by geographical location ensures that the portfolio benefits from a diversified wind resource and spreads the exposure to a number of potential technical risks associated with grid connections and with local distribution and national transmission networks. In addition, the portfolio includes six different turbine manufacturers, which diversifies technology and maintenance risks. Finally, each site contains a number of individual turbines, the performance of which is largely independent of other turbines.

Risks Affecting the Group

The ability of the Group to achieve its investment objective depends heavily on the managerial experience of the management team within the Investment Manager and more generally on the Investment Manager's ability to attract and retain suitable staff. The sustained growth of the Group depends upon the ability of the Investment Manager to identify, select and execute further investments which offer the potential for satisfactory returns.

The Investment Management Agreement includes key man provisions which would require the Investment Manager to employ alternative staff with similar experience relating to investment, ownership, financing and management of wind farm projects should for any reason any key man cease to be employed by the Investment Manager. The Investment Management Agreement ensures that no investments are made following the loss of key men until suitable replacements are found and there are provisions for a reduction in the investment management fee during the loss period. It also outlines the process for their replacement with the Board's approval. The key men also have an equity stake in the Company and are incentivised through the management fee which is linked to NAV.

The Group will finance further investments either by borrowing or by issuing further shares. The ability of the Group to deliver enhanced returns and consequently realise expected real NAV growth is dependent on access to debt facilities and equity capital markets. There can be no assurance that the Group will be able to borrow additional amounts or refinance on reasonable terms or that there will be a market for further shares.

A significantly strengthening economy may lead to higher future interest rates which could make the listed infrastructure asset class relatively less attractive to investors. In such circumstances, it is likely that there will be an increase in inflation (to which the revenues and costs of the investee companies are either indexed or significantly correlated) or an increase in power prices (due to greater consumption of power) or both. Both would increase the investment return and thus would provide a degree of mitigation against higher future interest rates.

Risks Affecting Investee Companies

A change in Government policy could lead to new renewable energy policies resulting in a change or abandonment of the Renewables Obligation. If these were applied retrospectively to current operating projects including those in the Group's portfolio, this could adversely impact the market price for renewable energy or the value of the green benefits earned from generating renewable energy. At the same time, such a policy change would be likely to halt further investment in new generating capacity, resulting in legally binding renewable energy targets being missed and adding to the already considerable security of supply concerns.

The Government has evolved the regulatory framework for new projects being developed but has consistently stood behind the framework that supports operating projects as it understands the need to ensure investors can trust regulation. This principle of "grandfathering" was confirmed in the Energy Act 2013.

Other things being equal, a decline in the market price of electricity would reduce the portfolio companies' revenues. Approximately half of the Group's revenues are derived from renewable support mechanisms, which are not linked to power prices.

The Group's dividend policy has been designed to withstand significant short term variability in power prices. A longer period of power price decline would materially affect the revenues of investee companies. In general, independent forecasters expect UK wholesale electricity prices to continue to rise in real terms (in the short and long term), based on tighter UK capacity margins in the short term and global energy supply and demand in the long term, together with the ongoing phasing out of coal-fired power stations.

The investee companies' revenues are dependent upon wind conditions, which will vary across seasons and years within statistical parameters. The standard deviation of wind speed is 6 per cent. over a 12 month period (2 per cent. over 10 years). Since long term variability is low, there is no significant diversification benefit to be gained from geographical diversification across weather systems.

The Group does not have any control over the wind resource but has no asset level leverage and has designed its dividend policy such that it can withstand significant short term variability in production relating to wind. Before purchase, the Group carries out extensive due diligence and relevant historical wind data is available over a substantial period of time. The other component of wind energy generation, a wind farm's ability to turn wind into energy, is mitigated by only purchasing wind farms with a proven operating track record.

When acquiring wind farms which have only recently entered into operation, only limited operational data is available. In these instances, the acquisition agreements with the vendors of these wind farms will include a ''Wind Energy True-up'' which will apply once two years' operational data has become available. Under this true-up, the net load factor will be reforecast based on all available data and the purchase price will be adjusted, subject to de minimis thresholds and caps.

Wind turbines may have shorter life-spans than their expected life-span of 25 years. In the event that the wind turbines do not operate for the period of time assumed by the Group in its business model or require additional maintenance expenditure to do so, it could have a material adverse effect on investment returns.

The Group invests in companies that own wind turbines that have an appropriate operational track record. The Group performs regular reviews and ensures that maintenance is performed on all wind turbines across the wind farm portfolio. Regular maintenance ensures the wind turbines are in good working order and that turbines are fit for purpose over their expected life spans.

The physical location, operation and maintenance of wind farms may, if inappropriately assessed and managed, pose health and safety risks to those involved. Wind farm operation and maintenance may result in bodily injury or industrial accidents, particularly if an individual were to fall from height, fall or be crushed in transit from a vessel to an offshore installation or be electrocuted. If an accident were to occur in relation to one or more of the Group's investments and if the Group were deemed to be at fault, the Group could be liable for damages or compensation to the extent such loss is not covered under insurance policies. In addition, adverse publicity or reputational damage could ensue.

The Board reviews health and safety at each of its scheduled Board meetings and the Group engages a leading health and safety consultant to ensure the ongoing appropriateness of its health and safety policies.

By order of the Board

Tim Ingram

Chairman

22 February 2015

Investment Manager's Report

The Investment Manager

The investment management team's experience covers ownership, financing and operation of wind farm projects, both onshore and offshore, and investment in renewable energy infrastructure. All the skills and experience required to manage the Company's business lie within a single investment manager. The team is led by Stephen Lilley and Laurence Fumagalli.

Stephen has eighteen years of investment management and financing experience in addition to six years in industry and has invested over £800 million into the utilities and renewable sectors including stakes in UK onshore and offshore wind assets. Prior to joining the Investment Manager, Stephen led the Renewable Energy Infrastructure Asset Management team at Climate Change Capital (CCC) and was a senior director of M&G Investment Management's European Infrastructure fund. At M&G, Stephen led over £400 million of investments, including the acquisition of stakes in Kelda Group (Yorkshire Water), Zephyr (wind farms) and Meter Fit (gas/electricity metering). He also sat on the boards of these companies after acquisition. Prior to this he was a director at the Financial Security Assurance where he led over £2 billion of underwritings in the infrastructure and utility finance sectors. He has also worked for the investment companies of the Serco and Kvaerner Groups.

Laurence also has eighteen years of investment management and financing experience and has financed and advised on over one GW of installed UK wind capacity including the Zephyr portfolio, the RES Astraeus portfolio and the UK wind portfolios of Fred Olsen and Falck Renewables. Prior to joining the Investment Manager, Laurence held a number of senior roles within CCC including responsibility for origination and execution for all regions outside of China for CCC's €650 million Carbon Fund and €100 million Carbon Managed Account. Laurence and Stephen worked together on creating a listed wind fund from early 2011. Prior to joining CCC, Laurence spent approximately ten years in the European power sector in project and structured finance including heading the Bank of Tokyo-Mitsubishi's London-based renewables team.

The Investment Manager is authorised and regulated by the Financial Conduct Authority and is a full scope UK AIFM.

Investment Portfolio

The Group's investment portfolio as at the date of this report consists of interests in SPVs which hold the following underlying operating wind farms:

Portfolio Performance

The portfolio has performed in line with management expectations and there are no material issues that are affecting the performance of the assets.

Generation for the year was 564.6GWh, 3 per cent. below budget (8 per cent. above budget for the period 27 March 2013 to 31 December 2013)(1). Generation for the first six months of the year was in line with budget (as described in the half-yearly report), with the shortfall occurring in the second half of the year owing to lower wind resource. This effect was amplified by virtue of the portfolio increasing from 184.0MW to 271.5MW in the second half of the year.

Grouting and other scheduled works reduced availability at Rhyl Flats during the year. These works are now complete.

Major unscheduled outages included the failure of a blade at Little Cheyne Court (as a result of a lightning strike) and two further onshore cable joint failures at Rhyl Flats (all three cable joints have now been upgraded with a permanent rectification). Each is an insured event.

Power prices were weaker than forecast in 2014 owing to lower than forecast gas prices.

Slightly lower generation and weaker power prices led to lower 2014 revenues than forecast, but net cash generation and dividend cover remained robust (see Financial Performance below).

Various operation and maintenance contracts were renewed in the year (including the Siemens warranty, operation and maintenance contract at Rhyl Flats and operational management contracts at a number of wind farms). Together, these renewals result in approximately £1 million of ongoing savings per annum (approximately £10 million in NAV terms).

(1)Deviations from budget lie within reasonable statistical parameters. The standard deviation of energy yield over a 12 month period is 10 per cent. (standard deviation of wind speed 6 per cent.).

Health and Safety

There were no major incidents in the year to 31 December 2014.

Acquisitions

During the year, the Investment Manager priced 37 wind farms totalling 1,437MW, with 24 (1,042MW) being presented to the Investment Committee. Of the wind farms priced, six investments were made by the Group and 16 were acquired by other buyers.

The six wind farms acquired in 2014 were Kildrummy and Maerdy in June and Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft in August. Total investment amounted to £189.8 million (including acquisition and upfront finance costs, excluding cash).

Kildrummy was the third wind farm acquired from BayWa (Cotton Farm and Earl's Hall Farm were acquired in October 2013). The Company was the natural counterparty for BayWa owing to agreed documentation and trusted execution.

Maerdy was the first wind farm acquired from Velocita; trusted execution was again important.

Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft were acquired from AES, who wished to sell its entire UK operating portfolio. The Company invested alongside Swiss Life (51.6 per cent. and 48.4 per cent. respectively) and was in a strong competitive position since 100 per cent. investments require ongoing expertise and resources beyond the scope of the majority of financial investors.

The six investments represent further expansion and diversification of the portfolio at attractive IRRs. All six investments have been fully integrated into the portfolio (including the replacement of AES as operational manager at the end of January 2015).

The Group and the Investment Manager are both entirely independent of all five sellers from which the Group has acquired wind farms since listing.

Financial Performance

The table below demonstrates strong dividend cover in the year of 1.6x. Net cash generation after fees, costs and expenses was £32.4 million. After dividends, reinvestment, debt repayment and equity issuance, cash balances (Group and wind farm SPVs) increased from £17.1 million to £19.0 million in the year to 31 December 2014.

Investment Performance

The NAV at 31 December 2013 was £351.1 million (102.9 pence per share) and increased to £486.2 million (105.5 pence per share) by 31 December 2014.

(1) Including upfront acquisition and finance costs, excluding cash

NAV growth from 30 September 2014 (104.8 pence per share) to 31 December 2014 (105.5 pence per share) was weaker owing to the incorporation of lower power price forecasts in the 31 December 2014 NAV. While lower, long term power price forecasts have not fallen to the same degree as short term prices. The 31 December NAV also incorporates certain operational savings (see Portfolio Performance above).

A dividend of £10.6 million (3.08 pence per share) was paid in August 2014 in respect of the period 1 January to 30 June 2014 and a dividend of £14.2 million (3.08 pence per share) will be paid on 27 February 2015 in respect of the period 1 July to 31 December 2014.

Summary:

Reconciliation of Statutory Net Assets to Published NAV

NAV Sensitivities

NAV is the sum of:

· discounted cash flow valuations of the Group's investments;

· cash (at Group and wind farm SPV level); and

· other relevant assets and liabilities of the Group

less Aggregate Group Debt.

The DCF valuation of the Group's investments represents the largest component of NAV and the key sensitivities are considered to be the discount rate used in the DCF valuation and long term assumptions in relation to energy yield, power prices and inflation.

The unlevered discount rate used in the DCF valuation is between 8 and 9 per cent. (equivalent levered discount rate of approximately 11 per cent.(1)). The market discount rate has remained constant since listing. A variance of +/- 0.5 per cent. is considered to be a reasonable range of alternative assumptions for discount rate.

Base case energy yield assumptions are P50 (50 per cent. probability of exceedance) forecasts produced by expert consultants based on long term wind data and operational history. The P90 (90 per cent. probability of exceedance over a 10 year period) and P10 (10 per cent. probability of exceedance over a 10 year period) sensitivities reflect the future variability of wind and the uncertainty associated with the long term data source being representative of the long term mean. Given their basis on long term operating data, it is not anticipated that base case energy yield assumptions will be adjusted (other than any Wind Energy True-ups with compensating purchase price adjustments).

Long term power price forecasts are provided by a leading market consultant, updated quarterly and adjusted by the Investment Manager where more conservative assumptions are considered appropriate. Base case power prices are forecast to rise by approximately one per cent. per annum in real terms over the life of the wind farms. The sensitivity below assumes a 10% increase or decrease in power prices relative to the base case for each year of the asset life, which is a severe scenario (typically, short term prices are more volatile while long term prices remain relatively constant).

The base case long term RPI assumption is 2.5 per cent. (0.5 per cent. above the long term 2.0 per cent. CPI target).

(1)assumes 30 per cent. gearing and 3 per cent. interest

Gearing

Currently the Group has £105 million of corporate debt equating to 18 per cent. of GAV and the Group has no project level leverage.

Pipeline

The Investment Manager continues its ongoing process of identifying and executing potential new wind farm acquisitions.

Outlook

The regulatory outlook for operational wind farms in the UK remains stable. The Group's exposure to regulatory risk is considered minimal owing to the UK Government's policy of "grandfathering" for operational projects. The Group invests in operational wind farms, backed by known and fixed support mechanisms. Renewable developers on the other hand (predominantly wind and solar) face considerable uncertainty as the Renewable Obligation is replaced by CFDs for new projects (March 2015 in the case of solar >5MW and March 2017 in the case of wind). The general election in May 2015 may bring increased uncertainty for developers.

The secondary market for operational UK wind farms is over £25 billion, increasing to £60 billion of assets in the medium term, being the combined value of those assets currently in operation, in construction or consented. Both utilities and developers are looking to sell such assets to recycle capital into assets in development and construction.

Power prices were weaker than forecast in 2014 owing to lower than forecast gas prices.

UK gas prices rose during the latter half of the year, while global oil prices were falling. Notwithstanding this and the distinction between spot prices and long term forecasts, long term power price forecasts have fallen over the year. The long term power price forecast is updated each quarter and reflected in the reported NAV.

In general, independent forecasters expect UK wholesale electricity prices to continue to rise in real terms (in the short and long term), based on tighter UK capacity margins in the short term and global energy supply and demand in the long term, together with the ongoing phasing out of coal-fired power stations.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements and have elected to prepare the Company financial statements in accordance with IFRS as adopted by the EU. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Group for that period.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with IFRS as adopted by the EU, subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

· prepare a Director's Report, a Strategic Report and Director's Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.

Website Publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the UK governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' Responsibilities Pursuant to DTR4

The Directors confirm to the best of their knowledge that:

· the Group financial statements have been prepared in accordance with IFRS as adopted by the EU and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group; and

· the annual report includes a fair review of the development and performance of the business and the financial position of the Group and the parent company, together with a description or the principal risks and uncertainties that they face.

On behalf of the Board,

Tim Ingram

Chairman

22 February 2015

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

All results are derived from continuing operations.

Consolidated Statement of Financial Position

As at 31 December 2014

Authorised for issue by the Board on 22 February 2015 and signed on its behalf by:

Tim Ingram Shonaid Jemmett-Page

Chairman Director

Statement of Financial Position - Company

As at 31 December 2014

Authorised for issue by the Board on 22 February 2015 and signed on its behalf by:

Tim Ingram Shonaid Jemmett-Page

Chairman Director

Consolidated and Company Statement of Changes in Equity

For the year ended 31 December 2014

After taking account of cumulative unrealised gains of £25,941,397, the total reserves distributable by way of a dividend as at 31 December 2014 were £250,674,433.

After taking account of cumulative unrealised gains of £24,771,298, the total reserves distributable by way of a dividend as at 31 December 2013 were £242,236,554.

Consolidated Statement of Cash Flows

For the year ended 31 December 2014

Statement of Cash Flows - Company

For the year ended 31 December 2014

Notes to the Consolidated Financial Statements

For the year ended 31 December 2014

1. Significant accounting policies

The consolidated annual financial statements have been prepared in accordance with IFRS to the extent that they have been adopted by the EU and with those parts of the Companies Act 2006 applicable to companies under IFRS.

The annual financial statements have been prepared on the historical cost basis, as modified for the measurement of certain financial instruments at fair value through profit or loss. The principal accounting policies are set out below.

The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 and accordingly has not presented a Statement of Comprehensive Income for the Company alone. The profit after tax of the Company alone for the year was £30,446,391 (2013: £18,196,789).

The Company was formed on 4 December 2012, so comparative information in the financial statements covers the period from 4 December 2012 to 31 December 2013, but during that period the meaningful activities of the Company took place from the Company's listing on the London Stock Exchange on 27 March 2013 to 31 December 2013.

The Group adopted IFRS 13 "Fair Value Measurement" during the year, which provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group does not consider that the definition of fair value that is applied in IFRS 13 differs from its current approach and consequently, there is no impact from this standard on its financial position. However, IFRS 13 does expand the disclosure requirements in respect of fair value measurement, therefore these financial statements contain additional disclosures in note 9 regarding quantitative information on the unobservable inputs to level 3 investments.

The Group also adopted the amendments to IAS 32 "Financial Instruments: Presentation", IAS 36 "Impairment of Assets" and IAS 39 "Financial Instruments: Recognition and Measurement" with effect from 1 January 2014. These had no impact on the results and presentation of the Group's financial statements.

New and amended standards and interpretations not applied

At the date of authorisation of these financial statements, IFRS 9 "Financial Instruments" was issued but will not become effective until accounting periods beginning on or after 1 January 2018 and has not been applied in these financial statements.

Other accounting standards have been published and will be mandatory for the Company's accounting periods beginning on or after 1 January 2015 or later periods, however the impact of these standards is not expected to be material to the reported results and financial position of the Group.

The Directors have concluded that the Company continues to satisfy the criteria to be regarded as an investment entity as defined in the amendments to IFRS 10, IFRS 12 and IAS 27 and measures its subsidiaries at fair value through profit or loss, in accordance with IAS 39 "Financial Instruments: Recognition and Measurement" instead of consolidating those subsidiaries.

The financial support provided by the Company to its unconsolidated subsidiaries is disclosed in note 10 to the financial statements.

Notwithstanding this, the amendments to IFRS 10 require subsidiaries that provide services that relate to the investment entity's investment activities to be consolidated. Accordingly, the annual financial statements include the consolidated financial statements of Greencoat UK Wind PLC, Greencoat UK Wind 1 LLP and Greencoat UK Wind Holdco Limited. In respect of these entities, intra-Group balances and any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated unless the costs cannot be recovered. The financial statements of subsidiaries that are included in the consolidated financial statements are included from the date that control commences until the dates that control ceases.

The Company has taken the exemption permitted by IAS 28 "Investments in Associates and Joint Ventures" and IFRS 11 "Joint Arrangements" and upon initial recognition, will measure its investment in Associates and Joint Ventures at fair value, with subsequent changes to fair value recognised in the Income Statement in the period of change.

Financial assets and financial liabilities are recognised in the Group's Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net amount reported in the Consolidated Statement of Financial Position when there is a currently enforceable legal right to offset the recognised amounts and the Group intends to settle on a net basis or realise the asset and liability simultaneously.

The classification of financial assets at initial recognition depends on the purpose for which the financial asset was acquired and its characteristics.

All financial assets are initially recognised at fair value. All purchases of financial assets are recorded at trade date, being the date on which the Group became party to the contractual requirements of the financial asset.

The Group has not classified any of its financial assets as Held to Maturity or as Available for Sale.

The Group's financial assets comprise of only investments held at fair value through profit or loss and receivables.

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They principally comprise trade and other receivables and they are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method, less provisions for impairment. Transaction costs are recognised in the Consolidated Statement of Comprehensive Income as incurred.

The Company assesses whether there is any objective evidence that financial assets are impaired at the end of each reporting period. If any such evidence exists, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the loss is recognised in profit or loss.

Investments are designated upon initial recognition as held at Fair Value through Profit or Loss. Financial assets are recognised / derecognised at the trade date of the purchase / disposal. Investments are initially recognised at cost, being the fair value of consideration given. Transaction costs are recognised in the Consolidated Statement of Comprehensive Income as incurred. Thereafter, investments are measured at subsequent reporting dates at fair value in accordance with IFRS.

Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction.

Fair value is calculated on an unlevered, discounted cash flow basis in accordance with IAS 39. Gains or losses resulting from the revaluation of investments are recognised in the Consolidated Statement of Comprehensive Income.

A financial asset (in whole or in part) is derecognised either:

· when the Group has transferred substantially all the risks and rewards of ownership; or

· when it has neither transferred nor retained substantially all the risks and rewards and when it no longer has control over the assets or a portion of the asset; or

· when the contractual right to receive cash flow has expired.

Financial liabilities are classified according to the substance of the contractual agreements entered into.

All financial liabilities are initially recognised at fair value net of transaction costs incurred. All financial liabilities are recorded on trade date, being the date on which the Group becomes party to the contractual requirements of the financial liability. Due to their short term nature, unless otherwise indicated the carrying amounts of the Group's financial liabilities approximate to their fair values.

All loans and borrowings are initially recognised at cost, being fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. The loan balance as at the year end has not been discounted to reflect amortised cost, as this amount is not materially different from the outstanding balance.

The Group's other financial liabilities measured at amortised cost include trade and other payables and other short term monetary liabilities which are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.

A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the Consolidated Statement of Comprehensive Income.

Borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period to which they relate on an accruals basis.

Financial instruments issued by the Company are treated as equity if the holder has only a residual interest in the assets of the Company after the deduction of all liabilities. The Company's ordinary shares are classified as equity instruments.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from proceeds.

Incremental costs include those incurred in connection with the placing and admission which include fees payable under a placing agreement, legal costs and any other applicable expenses.

Cash and cash equivalents comprise cash balances, deposits held on call with banks and other short-term highly liquid deposits with original maturities of three months or less, that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

These consolidated financial statements are presented in pounds sterling which is the currency of the primary economic environment in which the Group operates.

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income.

Dividends payable are recognised as distributions in the financial statements when the Company's obligation to make payment has been established.

Interest income is accounted for on an accruals basis using the effective interest rate method. Dividend income is recognised when the Group entitlement to receive payment is established.

Expenses are accounted for on an accruals basis. Formation fees are those necessary for the establishment of the Company and are taken to the Statement of Comprehensive Income in the period in which they are incurred. Share issue expenses of the Company directly attributable to the issue and listing of shares are charged to the share premium account.

The Company issues shares to the Investment Manager in exchange for receiving investment management services. The fair value of the investment management services received in exchange for shares is recognised as an expense at the time at which the investment management fees are earned, with a corresponding increase in equity. The fair value of the investment management services is calculated by reference to the definition of investment management fees in the Investment Management Agreement.

Under the current system of taxation in the UK, the Group is liable to taxation on its operations in the UK.

Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively enacted at the date of the Consolidated Statement of Financial Position.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments, except where the Group is able to control the timing of the reversal of the difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Consolidated Statement of Comprehensive Income except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Deferred tax assets and liabilities are not discounted.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors, as a whole. The key measure of performance used by the Board to assess the Group's performance and to allocate resources is the total return on the Group's net assets, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.

For management purposes, the Group is organised into one main operating segment, which invests in wind farm assets.

All of the Group's income is generated within the UK.

All of the Group's non-current assets are located in the UK.

2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires the application of estimates and assumptions which may affect the results reported in the financial statements. Estimates, by their nature, are based on judgement and available information.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities are those used to determine the fair value of the investments as disclosed in note 9 to the financial statements.

As disclosed in note 9, the key assumptions that have a significant impact on the carrying value of investments that are valued by reference to the discounted value of future cash flows are the useful life of the assets, the discount factors, the level of wind resource, the rate of inflation, the price at which the power and associated benefits can be sold and the amount of electricity the assets are expected to produce.

Useful lives are based on the Investment Manager's estimates of the period over which the assets will generate revenue which are periodically reviewed for continued appropriateness. The standard assumption used for the useful life of a wind farm is 25 years, however this assumption may be shorter in some instances as determined by lease or other contractual arrangements. The actual useful life may be a shorter or longer period depending on the actual operating conditions experienced by the asset.

The discount factors are subjective and therefore it is feasible that a reasonable alternative assumption may be used resulting in a different value. The discount factors applied to the cash flows are reviewed annually by the Investment Manager to ensure they are at the appropriate level. The Investment Manager will take into consideration market transactions, where of similar nature, when considering changes to the discount factors used.

The revenues and expenditure of the investee companies are frequently partly or wholly subject to indexation and an assumption is made that inflation will increase at a long term rate.

The price at which the output from the generating assets is sold is a factor of both wholesale electricity prices and the revenue received from the Government support regime. Future power prices are estimated using external third party forecasts which take the form of specialist consultancy reports. The future power price assumptions are reviewed as and when these forecasts are updated. There is an inherent uncertainty in future wholesale electricity price projection.

Specifically commissioned external reports are used to estimate the expected electrical output from the wind farm assets taking into account the expected average wind speed at each location and generation data from historical operation. The actual electrical output may differ considerably from that estimated in such a report mainly due to the variability of actual wind to that modelled in any one period. Assumptions around electrical output will be reviewed only if there is good reason to suggest there has been a material change in this expectation.

3. Investment management fees

Under the terms of the Investment Management Agreement, the Investment Manager is entitled to a combination of a Base Fee and an Equity Element from the Company and a priority profit share from the LLP as set out below.

The Base Fee is paid quarterly in advance and is equal to £275,000 per quarter.

The Equity Element due to the Investment Manager is calculated quarterly in advance and has a value as set out below:

· on that part of the then most recently announced NAV up to and including £500 million, 0.25 x 0.2 per cent.; and

· on that part of the then most recently announced NAV over £500 million up to and including £1,000 million, 0.25 x 0.1 per cent.

The ordinary shares issued to the Investment Manager under the equity element are subject to a three year lock up starting from the quarter in which they are due to be paid.

The priority profit share payable from the LLP is paid quarterly in advance, in each case based upon the NAV as at the start of the quarter in question on the following basis:

· on that part of the then most recently announced NAV up to and including £500 million, an amount equal to 0.25 per cent. of such part of the NAV;

· on that part of the then most recently announced NAV over £500 million and up to and including £1,000 million, an amount equal to 0.225 per cent. of such part of the NAV; and

· on that part of the then most recently announced NAV over £1,000 million, an amount equal to 0.2 per cent. of such part of the NAV,

in each case less an amount equivalent to the quarterly Base Fee.

Investment management fees and priority profit share paid or accrued in the year were as follows:

Investment management fees and priority profit share paid or accrued in the period from 4 December 2012 to 31 December 2013 were as follows:

The value of the equity element and the priority profit share detailed in the tables above include the true-up amount for the period calculated in accordance with the Investment Management Agreement.

4. Return on investments

5. Operating expenses

BDO LLP was paid £50,000 during the year in relation to the October 2014 capital raise of the Company which is included in share issue costs. In the prior period and prior to the merger of PKF LLP with BDO LLP, PKF LLP was paid £95,000 in relation to work on the listing of the Company and BDO LLP was paid £74,794 in relation to work on the second capital raise of the Company, both of which were included in share issue costs.

BDO LLP were paid £Nil (2013: £21,250) in relation to limited scope due diligence and advice on the wind farm acquisitions which was included in acquisition costs.

BDO LLP was also paid a total of £Nil (2013: £27,900) during the year in relation to the statutory audit of three of the Group's unconsolidated subsidiaries, Tappaghan, Bin Mountain and Carcant.

6. Taxation

The tax charge for the year shown in the Statement of Comprehensive Income is lower than the standard rate of corporation tax of 23 per cent. to 31 March 2014 (2013: 24 per cent.) and 21 per cent. from 1 April 2014 (2013: 23 per cent.) (average rate of 21.5 per cent. (2013: 23.30 per cent.)). The differences are explained below.

7. Earnings per share

There was no income earned or shares issued between 4 December 2012 and 27 March 2013, therefore this period has not been included for the purpose of calculating the weighted average number of shares in the comparative period above.

Dilution of the earnings per share as a result of the equity element of the Investment Management fee as disclosed in note 3 does not have a significant impact on the basic earnings per share.

8. Dividends declared in relation to the year

The following tables show dividends paid during the year:

The following tables show dividends in respect of the year but declared and paid after the year end:

On 30 January 2015, the Company announced a dividend of 3.08 pence per share, bringing the total dividend declared in respect of the year to 31 December 2014 to 6.16 pence per share. The record date for the dividend was 13 February 2015 and the payment date is 27 February 2015.

9. Investments at fair value through profit or loss

On 3 March 2014 Holdco subscribed for additional equity in certain wind farms as disclosed in note 10, amounting to £81.0 million which was used to repay the outstanding balance of the shareholder loans amounting to £81.0 million. During the year, the movement in fair value of investments comprises movement in cash balances of SPVs of £0.4 million (net of £0.5 million cash acquired), acquisition and upfront finance costs of £3.0 million (included in the DCF valuation at acquisition but expensed in the financial statements), which was offset by a decrease in the DCF valuation of the investments of £2.2 million.

In the prior period, the movement in fair value of investments comprised movement in cash balances of SPVs of £7.4 million, the repayment of shareholder loans of £7.1 million, dissolving the shareholder loan to Braes of Doune of £6.7 million, acquisition and upfront finance costs of £4.5 million (included in the DCF valuation at acquisition but expensed in the financial statements), which was offset by a decrease in the DCF valuation of the investments of £0.9 million.

The movement in fair value of investments of the Company during the year and the prior period were as follows:

IFRS 13 "Fair Value Measurement" requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the following three levels:

· Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2 - inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

· Level 3 - inputs for assets or liabilities that are not based on observable market data (unobservable inputs).

The determination of what constitutes 'observable' requires significant judgement by the Group. The Group considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The only financial instruments carried at fair value are the investments held by the Group, through the SPVs, which are fair valued at each reporting date. The Group's investments have been classified within level 3 as the investments are not traded and contain unobservable inputs. The Company's investments are all considered to be level 3 assets. As the fair value of the Company's investments is ultimately determined by the underlying fair values of the SPV investments, the Company's sensitivity analysis of reasonably possible alternative input assumptions is the same as for the Group.

Due to the nature of the investments, they are always expected to be classified as level 3. There have been no transfers between levels during the year ended 31 December 2014. Any transfers between the levels would be accounted for on the last day of each financial period.

The Group's valuation policy and valuation methodology are based on IPEV Valuation Guidelines and are subject to review by the Board.

The unlevered discount rate used in the DCF valuation is between 8 and 9 per cent. (equivalent levered discount rate of approximately 11 per cent.(1)). The market discount rate has remained constant since listing. A variance of +/- 0.5 per cent. is considered to be a reasonable range of alternative assumptions for discount rate.

(1)assumes 30 per cent. gearing and 3 per cent. interest.

Base case energy yield assumptions are P50 (50 per cent. probability of exceedance) forecasts produced by expert consultants based on long term wind data and operational history. The P90 (90 per cent. probability of exceedance over a 10 year period) and P10 (10 per cent. probability of exceedance over a 10 year period) sensitivities reflect the future variability of wind and the uncertainty associated with the long term data source being representative of the long term mean. Given their basis on long term operating data, it is not anticipated that base case energy yield assumptions will be adjusted (other than any Wind Energy True-ups with compensating purchase price adjustments).

Long term power price forecasts are provided by a leading market consultant, updated quarterly and adjusted by the Investment Manager where more conservative assumptions are considered appropriate. Base case power prices are forecast to rise by approximately one per cent. per annum in real terms over the life of the wind farms. The sensitivity below assumes a 10% increase or decrease in power prices relative to the base case for each year of the asset life, which is a severe scenario (typically, short term prices are more volatile while long term prices remain relatively constant).

The base case long term RPI assumption is 2.5 per cent. (0.5 per cent. above the long term 2.0 per cent. CPI target).

Sensitivity analysis

The fair value of the Group's investments is £583,188,538 (2013: £394,765,170). The analysis below is provided to illustrate the sensitivity of the fair value of investments to an individual input, while all other variables remain constant. The Board considers these changes in inputs to be within reasonable expected ranges. This is not intended to imply the likelihood of change or that possible changes in value would be restricted to this range.

10. Unconsolidated subsidiaries, associates and joint ventures

The following table shows subsidiaries of the Group. As the Company is regarded as an Investment Entity as referred to in note 1, these subsidiaries have not been consolidated in the preparation of the financial statements:

* The Group's investments in Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft are held through SYND Holdco.

The following table shows associates and joint ventures of the Group which have been recognised at fair value as permitted by IAS 28 "Investments in Associates and Joint Ventures":

* The Group's investments in Middlemoor and Lindhurst are held through ML Wind.

As disclosed in note 9, Holdco had previously advanced loans to certain wind farms which accrued interest at a rate of 8 per cent. per annum to replace the loans of former shareholders. On 3 March 2014 Holdco subscribed for additional equity in these wind farms, amounting to £80,977,593 which was used to repay the outstanding balance of the shareholder loans amounting to £80,977,593. All accrued interest in relation to these loans was written off.

Security deposits and guarantees provided by the Group on behalf of its investments are as follows:

11. Receivables

12. Payables

(1) Management fee payable by the Group consists of the Equity Element payable for the quarter to 31 December 2014 as well as the 2014 true-up amount of the Equity Element and priority profit share calculated in accordance with the Investment Management Agreement.

(2) Management fee payable by the Company consists of the Equity Element payable for the quarter to 31 December 2014 as well as the 2014 true-up amount of the Equity Element calculated in accordance with the Investment Management Agreement.

13. Loans and borrowings

On 24 June 2014, Holdco entered into a loan facility agreement with RBS, RBC and Santander for an incremental loan facility of £42 million. This facility was fully drawn down on 25 June 2014 and the proceeds were used to purchase Kildrummy.

On 24 June 2014, Holdco entered into a loan facility agreement with RBS, RBC and Santander for an incremental loan facility of £51 million. This facility was fully drawn down on 30 June 2014 and the proceeds were used to purchase Maerdy.

On 22 August 2014, Holdco entered into a loan facility agreement with RBS, RBC and Santander for an incremental loan facility of £90 million. This facility was fully drawn down on 22 August 2014 and the proceeds were used to purchase a 51.6 per cent. stake in each of Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft.

The final maturity date of the loan facility is 24 June 2017 which is the third anniversary of the amended facility agreement. The margin is 235 basis points until 24 June 2015, 300 basis points in year two and 375 basis points in year three, if not refinanced with debt or equity. The loan is secured by a fixed charge over the shares in Holdco and a floating charge over Holdco's bank accounts. The minimum interest coverage under the terms of the facility agreement is 2.0x (with dividend lockup at 2.5x).

During the year, the Company repaid £128 million (2013: £80 million) of the loan facility, leaving an outstanding balance of £105 million (2013: £50 million). As at 31 December 2014, accrued interest on the loan was £517,836 (2013: £49,734).

14. Contingencies

At the time of acquisition, five of the wind farms in the portfolio (Cotton Farm, Earl's Hall Farm, Kildrummy, Maerdy and Middlemoor) had less than two years' operational data. Consequently, in line with the Group's policy of applying a wind energy true-up to wind farms which have only recently entered into operation, the purchase price for these wind farms may be adjusted (maximum adjustment £17.8 million across all five wind farms) so that it is based on a two year operational record, once the operational data has become available.

The Directors and the Investment Manager are of the opinion that the estimate of the energy yield utilised at acquisition for these assets remains the most appropriate unbiased estimate of the yield following two years' operational data. Any variances of actual energy production from the date of acquisition to the date of signing this report are attributable to weather fluctuations and other short term operational factors rather than more fundamental factors that might influence the long term assessment. Therefore it is not appropriate to recognise a contingent asset or liability in respect of these acquisitions.

15. Share capital - ordinary shares of £0.01